The federal Securities and Exchange Commission regulates the raising of capital on an interstate basis (i.e., when the raising of capital cross state lines). The NYS Attorney General's Bureau of Securities participates in the regulation under New York's "Blue Sky" laws, but for the most part the regulation takes a back seat to the federal regulation.
New York State can do something to help small business raising capital by taking advantage of the "intrastate offering exemption" under federal law, which allows a state to regulate the raising of capital if the transaction qualifies as wholly within the state. Also, there are federal programs that exempt interstate offerings of various types. The NYS Attorney General should actively help small businesses in New York comply with the technical requirements of securities laws by reducing the paperwork, offering inducements to venture capital firms (such as by creating a market for small business venture-capital offerings) and possibly by creating a trading market for intrastate securities, in which only bona fide residents of New York State could buy or sell the listed small business stocks.
I have spent years representing small underwriters and small companies trying to raise capital and their needs have never been met, because of the lack of an aftermarket for resale of the securities privately purchased; the lack of knowledge by small businesses as to their options; the high cost of compliance with securities laws requirements (involving high- cost securities lawyers, accountants, financial printing and sometimes experts). When these barriers are taken down, you are going to find very profitable small businesses having much higher investment potential than most publicly-available securities. The big problem is ensuring honest reporting of sales and profits by small businesses, a problem with many major corporations as well.